The "Size" Effect Over Different Time Periods By IndexFunds.com Staff 1999

It is widely accepted (although there is ongoing debate) that small company stocks outperform large company stocks over time due to their higher risks. This is a particularly hot issue today because of the recent high returns of the S&P 500 relative to small company stocks. Investors should note that long periods of time when one of the asset classes dominates are not unusual. In fact, because these periods occur and they are unpredictable, investors should consider investing in both large and small company stocks.

The charts below show the returns of small value stocks (DFA 6-10 Value index) relative to the S&P 500. For those keeping track, the DFA 6-10 Small Co. index and DFA 9-10 Small Co. index had returns of 12.9% and 13.8% respectively over the total 64-98 period.

IndexFunds.com Staff